Ⅰ. Introduction
o The goal of sustainable finance is to mainstream the sustainable development financial analysis and decision making.
ㅇ Recently, ESG investing is leading the global spread of responsible investing focusing on the three representative themes, Environmental, Social, and Corporate Governance, which were suggested by the UN PRI (Principles of Responsible Investment) in 2006. It also has contributed in incorporating environmental and social issues into other areas of finance, such as banking and insurance.
o These new standards of finance alter not only the flow of capital but also firms’ non-financial performance, which determines the social and environmental consequences of the industrial sector.
o This study aims to analyze the interaction between ESG investing and environmental policy which is intermediated by firms’ ESG activities.

Ⅱ. Global Trends
o The global market for sustainable investments is growing fast, and ESG integration has led the market growth taking the biggest share among all types of sustainable investments.
ㅇIn 2020, the amount of ESG integration increased to 25,195 billion USD from 10,353 billion USD in 2016, which accounts for 43.0% of the total sustainable investment.
o The growth of sustainable finance is expected to be boosted further as more countries are introducing strengthened, even mandatory, reporting.
ㅇThe European Commission adopted a proposal for the first set of sustainability reporting standards, the Corporate Sustainability Reporting Directive (CSRD) in April 2021, which introduces a requirement to report sustainabilit